Generation Debt: What Can Be Done?

This week, The Simple Dollar takes a look at Generation Debt, a book that proposes to show why today is a terrible time to be young, from a financial perspective, at least. Is there enough meat on this idea to make an interesting argument, or is this book just blowing in the wind? Let’s find out.

The book ends with a section that outlines what people can do to fix the deplorable situation outlined in the book. What can be done to ensure that later generations do not have to face the obstacles faced by Generations X and Y?

First of all, the book offers a collection of suggestions for baby boomers with children in the 20-35 age range. Here’s a few that stood out to me:

Understand that the financial experience of your child is much different than your own experience at that age. This is basically the entire premise of the book; if you read this book and still don’t understand this point, I have to wonder what you’ve been reading.

Have an adult conversation with your kids about money. This doesn’t mean trotting out the same old bromides, but actually listening to their issues and considering their reality. Often, the best support that you can give is a serious talk where their point of view is considered, no matter how you may feel about it.

Use some of your leverage to help. You can do any number of things, from offering clearly-delineated financial assistance to references to potential employment opportunities to contacting legislators about improving opportunities for Generation X and Y.

On the other hand, the book also offers a litany of suggestions for those people in Generation X and Y:

Divorce yourself from rampant materialism. You do not need that PlayStation 3; you do not need that $500 pair of pants. Don’t spend money on wasteful consumer product – buy what you need and bank the rest for things that really matter, like a home.

Maximize what you have. If you have a steady job that pays reasonably well, stick with it, even if you don’t like it. Build a financial backbone so that you can afford take a career leap later.

Take a stand. Form a political action committee or join with others that already have and take your message to the legislators. Work to reform the system instead of just complaining about it and bearing the burden.

Tomorrow, I’ll give a final “buy or don’t buy” recommendation for Generation Debt.

I read an article in USA Today a few weeks ago about seniors and retiring Baby Boomers being in massive amounts of credit card debt.
So, I suspect, that the poor money management habits and unhealthy views of buying and status that Gen X and Y have, they got from their parents. There’s a reason these generations have wrecked their financial health and it couldn’t have originated entirely with them. Remember that the Boomers were the grownups in the Me, Me, Me 80s where status was everything and the logo on you shirt meant more than what you actually did as a human being.

I think the general thesis here is that debt is becoming much less optional if you want to remain a functional member of the society. Yes, debt has always existed, but it was never an implicit requirement to go into debt.

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